Study: Hedge Funds Benefit from Institutional Investors Unloading

A new report has found that a hedge fund gaining a stake in a company is usually the result of a pension or mutual fund selling off its stocks.

The 44-page whitepaper, “Activist Hedge Funds: Who’s on the Other Side of Their Trades?” published last month by University of North Carolina professors Nickolay Gantchev and Chotibhak Jotikasthira, shows that the day an activist hedge fund reaches 5% ownership of a company, the fund purchases more than 1% while the institutional investor in question sells a net of 0.34% of outstanding shares in the company.